Coping with global warming, Chinese photovoltaic companies are the leading force

Source: Chemical Information Time: 2020-01-14

China's dominant position is the status quo, and market competition is unlikely to shake the position of Chinese manufacturers in the short term.

Australia’s terrible forest fires may become a catalyst for the global response to climate change. If this is the case, investors should once again focus on China, especially Chinese companies that dominate solar equipment sales.

At least 80% of the world's solar modules and panels are produced by Chinese manufacturers. US tariffs only affect 10% of the global market, and market competition is unlikely to shake the status of Chinese manufacturers in the short term. Kevin Tu, a Beijing-based researcher at the Center on Global Energy Policy at Columbia University, said: \"China's dominance is the status quo. These companies are performing throughout the value chain from silicon to finished panels outstanding.\"

This is not to say that stocks such as JinkoSolar Holdings (JKS), Xinyi Solar (00968. Hong Kong) and DQ Energy (DQ) (which have been in the past) have been stable. As with all emerging industries, global solar installed capacity increased tenfold in the 2010s, making it difficult for producers to adjust supply based on demand and maintain profitability. The industry was in crisis in the middle of 2018, when the Chinese government drastically cut solar energy subsidies. The number of domestic installations in China has fallen by more than 15%, and inventories have fallen by a third or more.

China's demand shrinks again in 2019, but the demand of other countries in the world makes up for this. Corrine Lin, chief analyst of PV Infolink in Taiwan, said that in the first half of 2019, China's solar module exports increased by 90%, and orders from the Netherlands and Vietnam and other countries are large. The situation in 2020 It should be better.

Philip Shen, a senior researcher in clean technology at Roth Capital Partners, said that what is driving the market today is the economy, not short-term government policies. Chinese manufacturers have lowered equipment prices by a quarter, pushing solar energy to a key benchmark of \"grid connection\" with fossil fuel power generation in many parts of the world. \"We are entering a new era of solar energy, and more and more demand is unsubsidized. We believe that the quality of profitability will steadily improve in the next few years.\" he said.

After the (market demand) rebound at the end of 2019, picking stocks for this upcoming new era will not be easy. Will Riley, who manages the Guinness Atkinson Alternative Energy Fund, is cautious about the commercialization of mobile device manufacturers. He is looking for companies that have a place in the market.

These include: Xinyi Solar, a major producer of solar glass, and \"one of the lowest-cost polysilicon manufacturers\", a large new energy company. At present, he has given up the largest component supplier Jinko Energy because the company's cost is too high, and in the past two months, the company's stock price has risen by half.

One company that lags behind its peers is Canadian solar company Canadian Solar (CSIQ), which combines China-centric module production with more than thirty actual solar projects, mostly in North America. The company's stock price has only risen 33% in the past year. Analysts said that by selling the project and returning cash to shareholders, the company can improve performance.

The near monopoly of Chinese manufacturers on solar equipment illustrates the complexity of sorting out China’s impact on the rest of the world. The high amount of government subsidies has undoubtedly given Chinese manufacturers a foothold in this industry. According to Lin Kelin of PV Infolink, in 2017, competitors in the US and Europe were still the best in this field. However, the ingenuity and economic strength of Chinese private enterprises have made the price competition of the solar energy industry come ahead of schedule. Kevin Tu, a researcher at Columbia University, expects a political rebound in the industry. \"This is unsustainable. We may see some revenge from the OECD (that is, the wealthy West).\"

Currently, there are some interesting investment prospects here.